SYDNEY, March 18 (Xinhua) -- One of Australia's "Big Four" banks has warned that oil prices could exceed 200 U.S. dollars per barrel if the conflict in the Middle East persists for three months.

A motorboat cruises along the shore off the town of Al Jeer on the Strait of Hormuz in the northern emirate of Ras Al Khaimah, with a tanker seen in the background, on February 25, 2026. (File photo: AFP)

In a new report, the head of business and industry economics at Westpac, Sian Fenner, said that oil prices could average 130 dollars per barrel in the second quarter of 2026 and peak at over 200 dollars per barrel if the ongoing war continues for another three months.

Fenner wrote in the report that such an outcome would drive a 1.3 percentage point spike in Australia's annual rate of inflation and lower GDP growth for the calendar year by around 0.5 percentage points.

Under a scenario where the conflict continues for one month, Fenner said that it would take at least another month for shipping through the Strait of Hormuz to normalize and oil prices would average around 90 dollars per barrel in Q2.

The report projected that liquefied natural gas (LNG) prices would rise more aggressively than oil prices under the shorter conflict scenario.

It said that Australian inflation would rise by around 0.8 percentage points and GDP growth for 2026 would fall by around 0.1 percentage points, which would be partly offset by stronger LNG and coal exports.